TV advertising impact on demand: The soft drinks market

<p style="text-align: justify;">This paper investigates the impact of TV advertising on the demand in the U.S. market of carbonated soft drinks based on the multinomial discrete choice model. The data used in the research involves information about purchases made ​​by consumers, the number of ad views, prices and other characteristics of the purchased products. The discrete choice model, partly adopted from Berry, Levinsohn, Pakes (1995), was modified to the features of the considered market. The use of the multinomial model allowed making some interesting conclusions. The assumption about the significant influence of TV advertising on consumer choice of carbonated soft drink brand was confirmed. The empirical results show that TV advertising plays an important role in increasing demand for the advertised brand. In addition, brand advertising has a positive significant impact on the demand for the other brands belonging to the same company. This indicates the need of considering the &laquo;additional effect&raquo; of TV advertising in the consumer demand model. The hypothesis that TV advertising of brand undermines the demand for brands belonging to competitors was confirmed. This stresses the importance of the &laquo;competitive effect&raquo; of TV advertising.</p>